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Major campaign launched to cut tourism VAT as regions tell Chancellor: Give Us A Break

Alex Nicoll investing at the White Hart Ironbridge

Alex Nicoll investing at the White Hart Ironbridge

Major campaign launched to cut tourism VAT as regions tell Chancellor: Give Us A Break

The tourism industry, backed by MPs from all parties, has launched a major campaign to cut VAT on hotel accommodation and tourist attractions to 5% in a bid to give Britain’s regions a helping hand.
Hundreds of companies big and small have been calling on George Osborne to make the change to enable the many regions dependent on tourism to invest in jobs and offer a better deal to tourists who can find cheaper holidays abroad.

Experts predict the change could create more than 120,000 new jobs. Tourism chiefs, together with a growing army of MPs, are calling on Mr Osborne to reduce the rate of VAT on hotel accommodation and attractions to 5% – which EU law enables it to do freely. This would make domestic holidays cheaper for Britons and the UK tourism industry more competitive internationally – in the face of the strengthening pound pushing people to head abroad.

Thousands of supporters range industry bodies such as the BHA and BALPPA, to small B&Bs, family run attractions, zoos and major international brands.

Alex Nicoll operator of the White Hart Inn, Ironbridge Shropshire, who has been a Operations Management Consultant for many years across the UK added  ”We welcome this initiative which would stimulate the tourism industry. Shropshire is a very popular destination for both UK and many oversees guests who naturally dine in restaurants and pubs; but many note how relatively expensive it is to eat out in the UK;  to my mind there is no question that if selling prices came down both tourists and locals would dine out more, which in turn would cause us to grow and employ more staff. Sales tax does seem excessive in this country”

As tourism is an extremely price sensitive industry, a reduction in VAT to levels competitive with all the other countries in the EU would make the UK much more attractive to foreign tourists and would create thousands of new jobs, many of which would be suitable for the unemployed.

For every additional jumbo jet that arrives in the UK from China, £1m is added to the UK economy, £200,000 goes to the Exchequer and 20 full time jobs are created.
The tourism sector currently runs a £17billion deficit because five British people go abroad on holiday for every two foreign visitors who come in. This situation will only worsen as the pound gets stronger.
Britain is now only one of four European countries to not have cut holiday taxes – and one of them, Lithuania is cutting its VAT next year.

James Day of Shropshire based hospitality marketing agency specialists ‘Leisure Marketing Midlands LTD‘ added “We support the marketing function of a wide range of hospitality businesses across the region, and a reduced VAT burden would enable them to invest in the growth of their businesses more, without worrying about their quarterly VAT bill – which can be significant – thus helping generate more income and corporate tax, rather then taxing their customers to enjoy themselves.”

While the UK government insists on charging all holidaymakers with 20% VAT, countries like Portugal, Holland and Belgium levy just 6% tax on all hotels, holiday camps and tourist attractions.
France and Spain charge 10% tax on staying in hotels and holiday parks, while VAT in Germans hotels is just 7%. As a result, a one-week family holiday in a mobile home in a holiday park in south-west France costs nearly £150 less than an identical holiday on Britain’s South Coast at Bognor Regis.
Graham Wason, Chairman of the Cut Tourism VAT campaign, said: “This campaign is about more than just tourism – it’s about the people, communities and jobs driven by it right across the country. Ministers need to take a long term view and it’s clear that cutting VAT will offer a vital lift to many areas that have been forgotten for far too long.”

Ufi Ibrahim, chief executive of the British Hospitality Association said: “This is about helping put British firms on a level playing with Europe and enabling them to invest more in communities, create more jobs and offer lower prices. Currently, we incentivise people to travel abroad – something amplified by the strengthening pound. As an island, it’s no wonder so many regions depend on the sector and we hope Mr Osborne will give us all a break in his next Budget.”

It is estimated that a significant tax cut cold stimulate the hospitality industry and create  120,000 new jobs, actually generating more tax in earnings and company profits.

Twitter: @CutTourismVat

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